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below the budgeted sales before a loss is incurred, Margin of safety is usually expressed as a percentage of budgeted sales. In the example 6.1, margin of safety is (5.000 - 2,500) units or 2,500 units that is 50% of the budgeted sales. 6.3.5 C/S Ratio and Break-even Point in a Multi-Product Situation In a multi-product situation, it is not possible to express the break-even point in terms of units. It is quite likely that different measuring units are used to measure sales quantity of different products. Even if a single unit is used, products may not be comparable and contribution per unit would be different. Therefore, under a multi- product situation, BEP is calculated in terms of sale value by using weighted average C/S ratio. Weight of each product in the sales-mix is used calculate the weighted average C/S ratio. The underlying assumption is that the same percentage movement in sales of all the products in the product-mix accompanies a percentage movement in total sales. Break-even point is calculated with the following assumptions: (a) Constant C/S ratio for each product; (b) Constant sales-mix; and (c) Constant fixed cost. The steps involved in calculating the break-even points are: (a) Calculate the CS ratio for each t28 product: (b) Calculate weighted average CIS ratio in relation to estimated proportion of sales; and (c) Use the weighted average C's ratio to calculate break-even point in terms of sale-value Example 6.2: (A) SSK manufactures and sells four types of products under the brand names A, B, C and D. The sales-mix in value comprises 33. 16% and 103 > % of A, B, C and Drespectively. The total budgeted sales (100%) are Rs. 60,000 per month. Operating costs are: Variable costs: Product: A 60% of selling price; B 68% of selling price: C 80% of selling price: D 40% of selling price; and Fixed cost Rs. 14,700 per month.Calculate the break-even point for the products on an overall basis. (B) It has been proposed to introduce a change in the sales mix as follows, the total sales per month remaining Rs. 60,000: Product 25% B 40% 30% D 5% Assuming that the proposal is implemented, calculate the break-even point

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